2018 (4) TMI 1086 - AT - Central Excise

CENVAT credit - credit availed without actual receipt of goods - it was alleged that M/s ASRM have diverted best quality of goods - Held that - demands are not sustainable against the appellants by denial the cenvat credit on the inputs procure by them without any corroborative evidence - appeal allowed - decided in favor of appellant.

Summary

Issues: Denial of Cenvat credit on defective raw material procured for manufacturing alloy and non-alloy steel ingots.

In this case, the appellants appealed against an order denying Cenvat credit on defective raw material purchased from a supplier. The raw material, purchased as waste material, was covered by valid invoices. The Revenue alleged that the supplier misrepresented the quality of goods, leading to the denial of Cenvat credit to the appellants. The authorities below imposed duty, interest, and penalty on the appellants. The appellants requested a decision on merits, which was supported by the Ld. AR. The Tribunal noted similar investigations in other cases where the issue was examined. Referring to previous judgments, the Tribunal observed that the Revenue's case was based on financial calculations and circumstantial evidence. It was noted that the Revenue failed to provide concrete evidence of the alleged diversion of goods by the supplier. The appellants demonstrated the receipt and utilization of raw material, supported by valid invoices. Statements from the dealer and the supplier confirmed the supply of inputs. The Tribunal concluded that the demands were not sustainable without corroborative evidence and set aside the impugned order, allowing the appeals with any consequential relief.

This judgment highlights the importance of substantiating allegations with concrete evidence in cases of denial of Cenvat credit. It emphasizes the significance of valid invoices and statements from involved parties to support claims of input procurement. The Tribunal's decision underscores the necessity for the Revenue to establish a clear link between alleged irregularities and the impact on the appellant's manufacturing process. By referencing previous judgments, the Tribunal ensures consistency in its approach to similar cases, emphasizing the need for a thorough examination of facts and evidence before denying Cenvat credit. The judgment serves as a reminder of the burden of proof on the Revenue to substantiate allegations of non-compliance by taxpayers, especially concerning the utilization of input materials in manufacturing processes.